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Chicken-Egg Solution

Solar and wind developers learn to shift project risk to the grid.

Fortnightly Magazine - February 2011

rates for Edison’s retail customers, and therefore higher rates for Edison’s transmission customers, including wholesale customers not buying energy from Edison. If proven, such a tying arrangement could violate standards of conduct that require retail energy marketing to be held separate from wholesale transmission.

Yet the public power agencies had raised the same objections with other interconnection agreements, only to see FERC reject the claims for lack of evidence in the Desert Sunlight and Calico Solar orders issued late last year. (See, Docket ER10-2169, Oct. 7, 2010, 133 FERC ¶ 61,019; Docket ER10-796, Dec. 6, 2010, 133 FERC ¶61,200.)

Now, however, armed with that letter, the municipal agencies they felt sure they had a better case, and filed a new protest to oppose FERC approval of Edison’s proposed interconnection agreement for a 60-MW wind facility sponsored by Granite Wind LLC, which also included a special plant abandonment clause.

But late last month FERC rejected that claim, again finding no cause to link a utility’s upfront grid financing with rate concessions from the renewable energy project sponsor:

“We do not find that the letter by itself establishes evidence of unduly discriminatory or anticompetitive conduct by SoCalEdison …

“We also agree … there is no evidence … that SoCalEdison’ agreement to provide up-front funding of network upgrades, subject to conditions, is violative of our standards of conduct.” (Docket ER11-2177, Jan. 20, 2011, 134 FERC ¶61,031.)

Interestingly enough, however, if the cities should choose to protest the LGIA for the much larger Blythe solar project, and its link to Edison’s request for transmission rate incentives, they might just as well cite Governor Schwarzenegger’s correspondence of late December, which echoed the same concerns expressed by Millennium Solar.

In his December letter, urging FERC to approve the rate incentives and the series of LGIA’s linked to that request and to the 1,000-MW Blythe Solar Millennium Project, Schwarzenegger reiterated the same argument—that without the guarantee of abandoned plant recovery, as proposed in both the LGIAs and Edison’s request for rate incentives, the price of renewable solar power sold by the project would be different:

“To the extent that abandoned plant treatment is not approved,” the governor writes, “the economics of the project will have to be restructured … and a price increase would be sought.”

Crying for Transmission

To find a more classic case for transmission rate incentives, consider the Atlantic Wind Connection, the $5 billion undersea high-voltage DC line proposed last fall by Trans-Elect, with funding support from Google Energy and the Japanese trading firm Marubeni. The line would run off the coasts of New Jersey, Delaware, Maryland, and Virginia. Although it’s claimed to be the first offshore transmission highway in the U.S., the AWC would partly mimic never fully realized Project Neptune, which, as originally proposed 10 years ago, was also planned to run under the Atlantic Ocean shoreline, from the Canadian maritime provinces (or perhaps Maine) down to landfalls in Boston, Connecticut, New York City and New Jersey, as this reporter noted 10 years ago in this magazine in the Frontlines column. (See, Jules Verne’s